Operations Management

Operations Management Chapter 9 – Layout Strategies Delivered by: Eng.Mosab I. Tabash

Strategic Importance of Layout Decisions The objective of layout strategy is to develop a cost-effective layout that will meet a firm’s competitive needs

Importance Layout Design Considerations • Higher utilization of space, equipment, and people • Improved flow of information, materials, or people • Improved employee morale and safer working conditions • Improved customer/client interaction • Flexibility

Types of Layout Office layout Retail layout Warehouse layout Fixed-position layout Process-oriented layout Product-oriented layout

Types of Layout Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information Retail layout: Allocates shelf space and responds to customer behavior Warehouse layout: Addresses trade-offs between space and material handling

Types of Layout Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)

Types of Layout • Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production

Good Layouts Consider Material handling equipment Capacity and space requirements Environment and aesthetics Flows of information Cost of moving between various work areas

Layout Strategies Table 9.1

Office Layout • Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information • Movement of information is main distinction • Typically in state of flux due to frequent technological changes

Relationship Chart Figure 9.1

Supermarket Retail Layout • Objective is to maximize profitability per square foot of floor space • Sales and profitability vary directly with customer exposure

Five Helpful Ideas for Supermarket Layout Locate high-draw items around the periphery of the store Use prominent locations for high-impulse and high-margin items Distribute power items to both sides of an aisle and disperse them to increase viewing of other items Use end-aisle locations

Servicescapes • Ambient conditions - background characteristics such as lighting, sound, smell, and temperature • Spatial layout and functionality - which involve customer circulation path planning, aisle characteristics, and product grouping • Signs, symbols, and artifacts - characteristics of building design that carry social significance

Warehousing and Storage Layouts • Objective is to optimize trade-offs between handling costs and costs associated with warehouse space • Maximize the total “cube” of the warehouse – utilize its full volume while maintaining low material handling costs

Warehousing and Storage Layouts Material Handling Costs • All costs associated with the transaction • Incoming transport • Storage • Finding and moving material • Outgoing transport • Equipment, people, material, supervision, insurance, depreciation • Minimize damage and spoilage

Warehousing and Storage Layouts • Warehouse density tends to vary inversely with the number of different items stored • Automated Storage and Retrieval Systems (ASRSs) can significantly improve warehouse productivity by an estimated 500% • Dock location is a key design element

Cross-Docking • Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse • Requires tight scheduling and accurate shipments, bar code

Random Stocking • Typically requires automatic identification systems (AISs) and effective information systems • Random assignment of stocking locations allows more efficient use of space • Key tasks • Maintain list of open locations • Maintain accurate records • Sequence items to minimize travel, pick time • Combine picking orders • Assign classes of items to particular areas

Customizing • Value-added activities performed at the warehouse • Enable low cost and rapid response strategies • Assembly of components • Loading software • Repairs • Customized labeling and packaging

Fixed-Position Layout • Product remains in one place • Workers and equipment come to site • Complicating factors • Limited space at site • Different materials required at different stages of the project • Volume of materials needed is dynamic

Alternative Strategy • As much of the project as possible is completed off-site in a product-oriented facility • This can significantly improve efficiency but is only possible when multiple similar units need to be created

Process-Oriented Layout • Like machines and equipment are grouped together • Flexible and capable of handling a wide variety of products or services • Scheduling can be difficult and setup, material handling, and labor costs can be high

Patient A - broken leg ER triage room Emergency room admissions Patient B - erratic heart pacemaker Surgery Laboratories Radiology ER Beds Pharmacy Billing/exit Process-Oriented Layout Figure 9.3

Process-Oriented Layout • Arrange work centers so as to minimize the costs of material handling • Basic cost elements are • Number of loads (or people) moving between centers • Distance loads (or people) move between centers

n i = 1 n j = 1 Minimize cost = ∑ ∑ Xij Cij Process-Oriented Layout where n = total number of work centers or departments i, j = individual departments Xij = number of loads moved from department i to department j Cij = cost to move a load between department i and department j

Process Layout Example Arrange six departments in a factory to minimize the material handling costs. Each department is 20 x 20 feet and the building is 60 feet long and 40 feet wide. Construct a “from-to matrix” Determine the space requirements Develop an initial schematic diagram Determine the cost of this layout Try to improve the layout Prepare a detailed plan

Number of loads per week Department Assembly Painting Machine Receiving Shipping Testing (1) (2) Shop (3) (4) (5) (6) Assembly (1) Painting (2) Machine Shop (3) Receiving (4) Shipping (5) Testing (6) Process Layout Example 50 100 0 0 20 30 50 10 0 20 0 100 50 0 0 Figure 9.4

Area 1 Area 2 Area 3 Area 4 Area 5 Area 6 40’ 60’ Process Layout Example Assembly Painting Machine Shop Department Department Department (1) (2) (3) Receiving Shipping Testing Department Department Department (4) (5) (6) Figure 9.5

100 50 30 1 2 3 20 20 10 50 100 4 5 6 50 Process Layout Example Interdepartmental Flow Graph Figure 9.6

n i = 1 n j = 1 Cost = ∑ ∑ Xij Cij Process Layout Example Cost = $50 + $200 + $40 (1 and 2) (1 and 3) (1 and 6) + $30 + $50 + $10 (2 and 3) (2 and 4) (2 and 5) + $40 + $100 + $50 (3 and 4) (3 and 6) (4 and 5) = $570

30 50 100 2 1 3 10 20 50 100 20 50 4 5 6 Process Layout Example Revised Interdepartmental Flow Graph Figure 9.7

n i = 1 n j = 1 Cost = ∑ ∑ Xij Cij Process Layout Example Cost = $50 + $100 + $20 (1 and 2) (1 and 3) (1 and 6) + $60 + $50 + $10 (2 and 3) (2 and 4) (2 and 5) + $40 + $100 + $50 (3 and 4) (3 and 6) (4 and 5) = $480

Area 1 Area 2 Area 3 Area 4 Area 5 Area 6 40’ 60’ Process Layout Example Painting Assembly Machine Shop Department Department Department (2) (1) (3) Receiving Shipping Testing Department Department Department (4) (5) (6) Figure 9.8

Computer Software • Graphical approach only works for small problems • Computer programs are available to solve bigger problems • CRAFT • ALDEP • CORELAP • Factory Flow

Work Cells • Reorganizes people and machines into groups to focus on single products or product groups • Group technology identifies products that have similar characteristics for particular cells • Volume must justify cells • Cells can be reconfigured as designs or volume changes

Advantages of Work Cells • Reduced work-in-process inventory • Less floor space required • Reduced raw material and finished goods inventory • Reduced direct labor • Heightened sense of employee participation • Increased use of equipment and machinery • Reduced investment in machinery and equipment

Improving Layouts Using Work Cells Current layout - workers in small closed areas. Cannot increase output without a third worker and third set of equipment. Improved layout - cross-trained workers can assist each other. May be able to add a third worker as additional output is needed. Figure 9.10 (a)

Improving Layouts Using Work Cells Current layout - straight lines make it hard to balance tasks because work may not be divided evenly Improved layout - in U shape, workers have better access. Four cross-trained workers were reduced. U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection Figure 9.10 (b)

Requirements of Work Cells Identification of families of products A high level of training, flexibility and empowerment of employees Being self-contained, with its own equipment and resources Test (poka-yoke) at each station in the cell

Repetitive and Product-Oriented Layout Organized around products or families of similar high-volume, low-variety products Volume is adequate for high equipment utilization Product demand is stable enough to justify high investment in specialized equipment Product is standardized or approaching a phase of life cycle that justifies investment Supplies of raw materials and components are adequate and of uniform quality

Advantages Low variable cost per unit Low material handling costs Reduced work-in-process inventories Easier training and supervision Rapid throughput Disadvantages High volume is required Work stoppage at any point ties up the whole operation Lack of flexibility in product or production rates Product-Oriented Layouts

McDonald’s Assembly Line Figure 9.12

Assembly-Line Balancing • Objective is to minimize the imbalance between machines or personnel while meeting required output • Starts with the precedence relationships • Determine cycle time • Calculate theoretical minimum number of workstations • Balance the line by assigning specific tasks to workstations

Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 This means that tasks B and E cannot be done until task A has been completed Electronic copier Component Example

Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 C G F A B D I 5 E H 10 11 3 7 4 3 12 11 Electronic copier Component Example Figure 9.13

Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 Production time available per day Units required per day C Cycle time = G F A B D I 5 E H = 480 / 40 = 12 minutes per unit 10 11 3 7 4 Minimum number of workstations 3 = 12 11 n i = 1 = 66 / 12 = 5.5 or 6 stations ∑ Time for task i Cycle time Figure 9.13 Electronic copier Component Example 480 available mins per day 40 units required

480 available mins per day 40 units required Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 Cycle time = 12 mins 5 Station 2 Minimum workstations = 5.5 or 6 10 11 3 7 G H C D B A E I F 4 3 Station 3 12 11 Station 6 Station 1 Station 4 Station 5 Electronic copier Component Example Figure 9.14

480 available mins per day 40 units required Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 Cycle time = 12 mins Minimum workstations = 5.5 or 6 = 66 minutes / (6 stations) x (12 minutes) = 91.7% ∑ Task times (Actual number of workstations) x (Largest cycle time) Efficiency = Electronic copier Component Example

Operations Management